Product Safety Regulator Hobbled by Decades of Negligence

by Matthew Madia, 2/5/2008

The nation's premiere consumer product regulator, the U.S. Consumer Product Safety Commission (CPSC), has been crippled by budget cuts and staffing losses that now span decades. Every president since Gerald Ford has proposed cutting the agency's budget at least once, and Congresses controlled by both parties have obliged. Recent attention surrounding massive product recalls prompted Congress at the end of 2007 to give the agency one of its biggest funding boosts, and lawmakers are considering additional legislation to ensure consistent long-term funding. President Bush's FY 2009 budget request, announced Feb. 4, proposes level funding for the agency.

In 1972, Congress passed the Consumer Product Safety Act, which created CPSC. CPSC began operating in 1973 as an independent federal regulatory agency to protect the public from product risks and reduce injuries and fatalities associated with the use of those products. CPSC now regulates more than 15,000 kinds of consumer products.

Over the past year, CPSC has been in the news more than at any time in recent memory. Unfortunately, it has been for all the wrong reasons: massive product recalls, misconduct by agency commissioners, and toothless enforcement practices, to name a few. Congress, the media, and the public interest community have traced many of the agency's woes back to resource shortfalls.

From FY 1974, when the agency first became fully operational, to FY 2008, CPSC's budget has been cut almost 40 percent when adjusted for inflation.* (See Graph 1.) Employment at the agency has been nearly halved over the same period. However, the overall trend does not paint an accurate picture of how the agency's budget has been abused by numerous presidents and congressional appropriators.

Graph 1

CPSC's budget and staffing levels reached their peak in 1976, only the agency's fourth year in existence. During the final years of the Ford administration, throughout the Carter administration, and into the Reagan administration, CPSC faced budget cuts every fiscal year. The trend reversed in the final years of the George H.W. Bush administration, when the agency received a 17-percent inflation-adjusted increase — the largest increase in nearly two decades.

However, that good was quickly undone. In the first budget of his presidency, President Bill Clinton proposed a 15 percent cut for the agency. Congress fulfilled Clinton's request and then cut the agency's budget even further the next year. Clinton subsequently proposed a budget increase for CPSC for FY 1996, but by then the political landscape had shifted dramatically as a new Republican-controlled Congress sought to shrink the size of administrative government. Congress rejected Clinton's request for an increase and imposed another budget cut. CPSC's budget was lower then than at any point in the agency's history — little more than a third of what it was in FY 1976.

Even though CPSC's budget increased in the late 1990s and under the watch of George W. Bush in the early 2000s, employment levels struggled to grow and, since FY 2004, have dropped sharply. From FY 1996, when the agency's budget reached its historical nadir, to FY 2007, the agency's budget grew 19 percent when adjusted for inflation. However, staffing levels did not follow a similar trend. For the same period, employment fell to 393 full-time employees from 469 full-time employees — a 16-percent drop. (See Graph 2.)

Graph 2

As CPSC Shrinks, Industries Grow

While CPSC has diminished in size and capacity, the industries it regulates have grown. Two examples — toys and all-terrain vehicles (ATVs) — illustrate the difficulty CPSC has faced in keeping pace with the regulated community and fulfilling its mission to reduce hazards and injuries.

Recalls of children's products made national news throughout 2007. Excessive levels of lead — a toxin known for decades to pose a danger to children — were found in toys, clothes, and children's jewelry. As the federal regulatory body in charge of ensuring children's product safety, CPSC came under scrutiny and was consistently shown to be ineffective, largely as a result of the decades-long erosion of its budget and staff.

CPSC has recently been announcing more toy recalls than at any other time in its history. In FY 2007, CPSC announced 58 toy recalls — the most ever. In FY 2008 (beginning Oct. 1, 2007), CPSC has already announced 40 recalls. The number of toy recalls in FY 2008 is the second-highest in agency history and is likely to surpass the record set in FY 2007.

The rise in recalls is not surprising, as the number of toys, especially imported toys, is increasing. The value of toys imported into the U.S. has increased 16-fold since 1974, even when adjusted for inflation, according to a report by Public Citizen. Since 1992, the value has nearly doubled. More and more of those imports are coming from China. Nearly 80 percent of toys on U.S. shelves are made in China, Public Citizen found.

As the number of toys in the marketplace has grown, so too has the number of toy-related injuries. CPSC estimates the number of toy-related injuries jumped from about 130,000 in 1996 to about 220,000 in 2006 — more than 600 injuries every day. Even when adjusted for population growth, the rate of toy-related injuries has increased significantly since the 1990s (see Graph 3.)

Graph 3

While the popularity of ATVs has grown in recent decades, CPSC has actually rolled back regulations on the recreational vehicles. In December 2007, a former CPSC staff statistician, Robin Ingle, wrote in The Washington Post, "In the 1990s, the industry had been bound by strict regulatory agreements with CPSC, but they had expired in 1998." Since then, CPSC has stalled new regulations and suppressed reports on the dangers associated with ATVs, according to Ingle.

As the ATV industry has grown, ATV-related deaths have skyrocketed. From 1985 to 2004, four-wheel ATV use increased 17-fold, according to CPSC statistics. CPSC estimates show a steady rise in ATV-related deaths over the same 20-year period, from 55 in 1985 to 734 in 2004. The sharp rise in fatalities and similar trends in injury rates prove CPSC has made little or no progress in reducing the risks associated with ATVs, even when accounting for their proliferation. (See Graph 4.)

Graph 4

Ingle's column points to the culture inside CPSC as the reason for the agency's lack of progress. But even with a shift in attitude, diminishing resources have left a skeletal staff which would face difficulty in reducing risk by regulation. In 1988, when CPSC began regulating ATVs after settling a lawsuit with manufacturers, the agency employed more than 36 staff members for every 100,000 four-wheel ATVs in use. By 2004, CPSC employed fewer than seven staff members for every 100,000 ATVs.

As the risk associated with products like ATVs and toys continues to rise, CPSC will face increasing difficulty making long-term progress in reducing injuries and fatalities, especially if resources are not increased to match the challenges the agency faces.

Outlook

For FY 2008, Congress responded to increasing public concern over the ability of CPSC to ensure product safety and increased appropriations for the agency by approximately 25 percent. Acting CPSC Commissioner Nancy Nord has promised to use the additional funds to begin upgrading CPSC laboratories, hire additional staff, and enhance product inspection at American ports, according to BNA news service (subscription).

However, even with the substantial budget increase, CPSC's budget is lower than it was in the early 1980s when adjusted for inflation. More importantly, the agency will need steady increases in appropriations for years in order to restore the employment levels necessary for the agency to fulfill its mission.

Legislation passed by the House in December 2007 and pending in the Senate would increase CPSC's budget authority over the next decade. The House bill, H.R. 4040, the Consumer Product Safety Modernization Act, would expand the agency's budget authority to $100 million by FY 2011 and provide an additional $60 million over the next three fiscal years for capital improvements. The Senate bill, S. 2045, the CPSC Reform Act of 2007, would expand the authority to more than $141 million by FY 2015 and provide an additional $80 million over the next two fiscal years for capital improvements.

Even if such legislation were to be enacted, CPSC and the public would need a commitment from the next administration that the agency's budget would not be subject to such volatility as it has been in the past.

In his FY 2009 budget request released Feb. 4, Bush proposed level funding for the agency, a budget cut when adjusted for inflation. It will now be up to Congress to decide its commitment to increasing CPSC resources during what will likely be a contentious appropriations battle this fall.

Endnotes:
All budget and staffing data for fiscal years 1980-2007 are from the Budget of the U.S. Government appendices, fiscal years 1982-2009. These volumes are the president's request to Congress and contain final budget numbers and program data from two fiscal years prior. Budget data for Fiscal Year 2008 comes from the final appropriations bill passed by Congress and signed by the president (H.R. 2764).